What is “past performance” or “past consideration” in contract law?

Every contract needs consideration. For example. in a bilateral contract each party must promise to do something that he was not already required to do, or to agree to not do something he was allowed to do. For example, A promises to pay B $100 if B agrees to clean A’s car. B agrees. Now we have consideration. Both parties are promising to do something they otherwise would not be required to do.

But something a person already did – – an act prior to negotiating the contract – – is not considered consideration. Courts call this “past performance” or “past consideration”. Let’s say A cleans B’s car and B says, “Great job! I’ll pay you $50.” Is there a contract? Probably not. B does not have a contractual obligation to pay A. Why?

Because A’s act occurred in the past. A & B never agreed that that A should clean B’s car. B might be grateful and could feel a moral obligation towards A but there is no contract. To have legal consideration the parties must reach an agreement as to what each party will give and what each party will get.